AASIA EXPORTS, MUMBAI V. ACIT 11(1), MUMBAI

ITA 7541/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9385 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-02-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 21-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 7541 / MUM/ 20 1 2 ( / ASSESSMENT YEAR: 1998 - 99 ) ASIA EXPORTS HINDUJA HOUSE, 171, DR A.B. R D, WORLI MUMBAI PIN:400018 / VS. ACIT 11(1) AAYAKAR BHAVAN, M.K. RD MUMBAI PIN: 400020 ./ ./ PAN/GIR NO. : AAAFA 6680 N ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 10.08 . 2017 / DATE OF PRONOUNCEMENT : 27. 09 . 2017 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 17 .1 0 .201 2 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 1998 - 99 IN WHICH THE PENALTY LEVIED BY THE AO HAS BEE N CONFIRMED . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED U/S 271(1)(C) OF THE I.T. ACT LACKS JURISDICTION. THE PENALTY LEVIED SHOULD BE CANCELLED. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY LEVIED U/S 271 (1)(C) OF THE I.T. ACT IS WITHOUT RECORDING PROPER SATISFACTION. THE PENALTY LEVIED SHOULD BE CANCELLED. ASSESSEE BY : M R. J.P. BAIRAGRA (AR) REVENUE BY: SHRI RAJESH KUMAR YADAV , DR ITA. NO. 7541/M/2012 A.Y. 1998 - 99 2 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN UPHOLDING THE PENALTY LEVIED OF RS.37,36,140/ - U/S 271(1)(C) OF THE I.T. ACT. THE PENALTY LEVIED SHOULD BE CANCELLED. THE APPELLANT RESERVES ITS RIGHT TO ADD TO ALTER, AMEND, MODIFY OR DELETE ANY OF THE GROUNDS TAKEN IN THIS APPEAL. THE GROUND TAKEN IN THIS APPEAL ARE WITHOUT P REJUDICE TO EACH OTHER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 1998 - 99 ON 02.11.1998 DECLARING TOTAL INCOME TO THE TUNE OF RS. 10,00,11,243/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQU ENTLY, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 ON 30.03.2001 A SSESSING THE TOTAL INCOME TO THE TUNE OF RS.2,68,15,560/ - AFTER MAKING THE ADDITION OF RS.1,68,70,312/ - UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THEREAFTER, THE P ENALTY PROCEEDING WAS INITIATED . A FTER GETTING THE REPLY , THE PENALTY TO THE TUNE OF RS. 37,36,140/ - WAS LEVIED. THE ASSESSEE F ILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE PENALTY , THEREFORE , THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD TH E ARGUMENT ADVANCED BY THE LD. R EPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. WE NOTICED THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME TO THE TUNE OF RS . 10,00,11,243/ - ON 02.11.1998. THEREAFTER, THE ASSESSMENT O F THE ASSESSEE WAS COMPLETED IN VIEW OF THE PROVISION U/S 143 (3) OF THE I.T. ACT ON 30.03.200 1 ASSESSING THE TOTAL INCOME TO THE TUNE OF RS. 2,68,15,560/ - . THE ASSESSING OFFICER RAISED ADDITION TO THE TUNE OF RS .1,68,70,312/ - . IT IS TO BE SEEN IN WHICH CI RCUMSTANCES THE ASSESSING OFFICER RAISED THE ADDITION IN THE ASSESSMENT. THE ASSESSMENT ORDER DATED 30.03.2001 IS ON THE FILE D IN WHICH WE NOTICED THAT THE CERTAIN CLAIM RAISED ITA. NO. 7541/M/2012 A.Y. 1998 - 99 3 BY THE ASSESSEE IN CONNECTION WITH THE FOREIGN TRAVELLING EXPENSES, HOTEL EXPE NSES AND DISALLOWANCE OF INTEREST EXPENSES WAS DECLINED . T HE ASSESSEE TRAVEL UP TO ITAT AND THE CASE OF THE ASSESSEE WAS DECIDED BY HON BLE ITAT I N ITA. NO. 4851/M2003 IN WHICH THE ADDITION ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES TO THE TUNE OF RS. 13,62,9 75/ - , HOTEL EXPENSES TO THE TUNE OF RS.22,60,633/ - & DISALLOWANCES OF INTEREST EXPENSES TO THE TUNE OF RS.70,5 1,075/ - WAS CONFIRMED. APPARENTLY, THE CLAIM RAISED BY THE ASSESSEE IN CONNECTION WITH FOREIGN TRAVELLING EXPENSES , HOTEL EXPENSES AND DISALLOWANC E OF INTEREST EXPENSES WAS DISALLOWED AND ON ACC OUNT OF THE SAID DISALLOWANCE T HE PENALTY PROCEEDING WAS INITIATED BY ASSESSING OFFICER WHICH WAS CONFIRMED BY THE CIT(A) . NOW, IT IS TO BE SEEN THAT IN THE SAID CIRCUMSTANCES THE PENALTY IS LEVIABLE OR NOT. IN THE INSTANT CASE, THREE CLAIM OF THE ASSESSEE HAS BEEN DECLINED FIRSTLY THE ASSESSING OFFICER DECLINED THE CLAIM OF FOREIGN TRAVEL EXPENSES TO THE TUNE OF RS.13,62,975/ - . THE ASSESSEE CLAIMED THE BUSINESS EXPENDITURE ON ACCOUNT OF FOREIGN TRAVEL EXPENS ES OF MRS HARSHA A HINDUJA PARTNER OF THE APPELLANT FIRM IN RESPECT TO VISIT AT U.K AN MALDIVES ISLAND. THE SAID EXPENSES WERE DISALLOWED BECAUSE THE SAME WAS NOT FOUND FOR BUSINESS PURPOSE AND WAS TREATED AS PERSONAL EXPENSES. DISALLOWANCE OF THE CLAIM OF THE ASSESSEE NOWHERE ATTRACT THE PENALTY IN VIEW OF THE LAW SETTLED IN CIT V/S RELIANCE P ETRO PRODUCTS(P)LTD (2010) 322ITR 158/189 TAXMAN (SC). IT IS HELD THAT : - THE WORD PARTICULARS MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THE INSTANT CASE, THERE WAS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUES TION OF INVITING THE ITA. NO. 7541/M/2012 A.Y. 1998 - 99 4 PENALTY U/S 271 (1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF HE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO T HE INACCURATE PARTICULARS.(PARA 9) THE REVENUE CONTENDED THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY WERE INCORRECT, IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS ( 1) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONES INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. SUCH CONTENTION COULD NOT BE ACCEPTED AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT, B Y ITSELF, WOULD NOT ATTRACT THE PENALTY U/S 271(1)(C). IF THE CONTENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE WAS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WOULD INVITE PENALTY U/S 271(1)(C ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE.(PARA 10). 5. SIMILAR FINDING HAS BEEN GIVEN BY THE HONBLE SUPREME COURT, HIGH COURTS AND TRIBUNAL IN THE CASES TITLE AS T. ASHOK PAIF VS. CIT (292 ITR 11) SC, CHEMPURE VS. ITO (40 SOT 164), CIT VS . SHIVLAL DESAI & SONS 114 ITR 377 , CIT VS. ZOOM COMMUNICATION (P.) LTD. 2010, 327 ITR 510/191 TAXMAN 179 (DELHI) BRIJ MOHAN VS. CIT (1979) 120 ITR 1 & CIT V/S RELIANCE P ETRO PRODUCTS(P)LTD (2010) 322ITR. IN VIEW OF THE SAID LAW NO ITA. NO. 7541/M/2012 A.Y. 1998 - 99 5 PENALTY IS LEVIED BECA USE IT CANNOT BE SAID THAT THERE IS A CONCEALMENT OF INCOME FURNISHING THE INACCURATE PARTICULARS OF INCOME. THE OTHER DISALLOWANCE IS IN CONNECTION WITH THE HOTEL EXPENSES TO THE TUNE OF RS.22,60,633/ - , WHERE THE EXPENSES WERE CLAIMED ON ACCOUNT OF THE HO TEL EXPENSES INCURRED FOR MR. SUNIL BHARWANI WHO DEAL THE EXPORTED THE GOODS WORTH RS. 4.81 CRORES AT JAKARTA INDONESIA HOWEVER, THE DEAL WAS NOT EFFECTED AND THE AMOUNT WAS CLAIMED AS BAD DEB T. FINDING NO EVIDENCE THE CLAIM WAS DISALLOWED. THE THIRD CLAIM WAS IN CONNECTION WITH THE DISALLOWANCE OF INTEREST TO THE TUNE OF RS.4914334/ - U/S 143A AND INTEREST TO THE TUEN OF RS.609680/ - ON ACCOUNT OF ADVANCED GIVEN TO S.P. HINDUJ A (HUF) AND INTEREST TO THE TUNE OF RS.1526851/ - ON ACCOUNT OF ADVANCES GIVEN TO GR OUP CONCERN. THE TOTAL INTEREST WAS DISALLOWANCE TO THE TUNE OF RS.7051071/ - . THE SAID INTEREST WAS NOT FOUND FOR BUSINESS PURPOSE NOR SUBSTANTIATED BY ASSESSEE BY GIVING THE EVIDENCE ON RECORD. ANY HOW THE CLAIM WAS DECLINED BY THE AUTHORITIES. IT IS NOT A CASE OF FURNISHING THE INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. THE SAID DISALLOWANCE NOWHERE ATTRACT THE PENALTY IN VIEW OF THE ABOVE MENTIONED LAW I.E. AS T. ASHOK PAIF VS. CIT (292 ITR 11) SC, CHEMPURE VS. ITO (40 SOT 164), CIT VS. SHIVLAL DE SAI & SONS 114 ITR 377, CIT VS. ZOOM COMMUNICATION (P.) LTD. 2010, 327 ITR 510/191 TAXMAN 179 (DELHI) BRIJ MOHAN VS. CIT (1979) 120 ITR 1 & CIT V/S RELIANCE PETRO PRODUCTS(P)LTD (2010) 322 ITR 158/189 TAXMAN (SC). IN VIEW OF THE ABOVE MENTIONED LAW , WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS WHICH IS NOT ITA. NO. 7541/M/2012 A.Y. 1998 - 99 6 LIABLE TO BE SUSTAINABLE IN THE EYE S OF LAW. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) AND DELETE THE PENALTY . ACCORDINGLY , THE APPEAL OF THE ASSESSEE IS H EREBY ORDERED TO BE A LLOWED . 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 27 .09 . 2017 SD/ - SD/ - (G.S. PANNU ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 27 .09 . 2017 V.P. SINGH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3 . ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI